Leveraging your best clients

The lifeblood of a healthy and growing financial services practice is the acquisition of wealthy households.

The lifeblood of a healthy and growing financial services practice is the acquisition of wealthy households. The number of affluent and superaffluent clients has never been greater, and the growth rate of the superaffluent category is expected to exceed 15% in many markets.

The definition of an affluent household is one with $250,000 or more of investible assets; the superaffluent have $1 million or more of in-vestible assets.

The wealthy need and seek financial advice. In fact, when authors Russ Alan Prince and David A. Geracioti wrote “Cultivating the Middle Class Millionaire” (Wealth Management Press, 2005), they found that 14% of 1,417 retail in-vestors with between $500,000 and $5 million of liquid assets planned to change financial advisers in the next 12 to 24 months.

If those numbers hold true, in my hometown of Denver, for instance, 4,500 millionaires will change advisers this year. That is not good news for the advisers who will lose these clients, but it is a good indicator of market potential.

The irony of this acquisition opportunity is that although financial advisers recognize the importance of the acquisition of affluent clients, the number of clients that are acquired each year is small. In my experience with experienced financial advisers, the majority of them acquire fewer than four affluent relationships a year. When the losses of affluent clients are subtracted, the net number is two or fewer.

The reason for the disconnect between desire and opportunity is momentum. Early in their careers, most advisers prospect in order to build a practice. But as their business grows and they spend more time serving clients, advisers become victims of their own success and spend less time prospecting.

The challenge for most experienced advisers face is rekindling the marketing momentum. The good news is that experienced advisers have something going for them they didn’t have when they started — clients. Marketing through clients is much easier and potentially more fun than cold prospecting. The key is building processes in the practice to capitalize on that client leverage.

FIVE TECHNIQUES

Here are five marketing techniques that leverage current clients and will result in the addition of affluent clients:

Client referrals. Establish a proactive process for asking clients for referrals. Make the process part of the quarterly or annual review. At least once a year, ask each significant client for a referral. Be specific about the kind of prospect you are trying to lure. For example, you can tell clients that you can be particularly helpful when their friends or relatives are experiencing retirement, divorce, the death of a spouse or have relocated.

Influencer network: Develop a network of at least six certified public accountants and estate attorneys by asking clients for an introduction to their accountant and estate attorney, who are likely to accept an appointment with an adviser if their client provides the introduction. The adviser should build a good relationship by becoming an important resource.

Client events: Host educational and fun events around clients’ interests and ask clients to bring along friends who are likely to find your services helpful.

Speaking opportunities: Advisers can reach affluent investors by offering to speak to organizations to which their clients belong. Talks about investment-related subjects should be positioned as a public service. Ask the client to introduce you to the person at the organization, such as a local civic or religious group, responsible for its programs. One speaking engagement a month can mean exposure to more than 200 prospects annually. But follow-up with attendees is critical. The best way to do that is by passing out response cards before the seminar and fulfilling requests for information.

Natural market: Advisers should analyze their client records and determine whether any particular occupation stands out. You may be serving more dentists or retail-business owners, for example, than you realize. If so, ask some of these clients to be part of a marketing advisory board that can suggest ways for you to become more effective serving their niche. The process itself may lead to referrals.

The easiest way to increase the number of new affluent clients is to help your clients help you. Once the momentum is built, the results will come.

David J. Mullen Jr. is the president of LearnTactix, a financial-adviser training firm in Greenwood Village, Colo.